Newest data predicts return to balance for Northwest housing market

The latest data and estimates from a handful of Northwest Multiple Listing Service real estate professionals paint a picture of a much friendlier housing market for buyers in 2019.

As 2018 rolled to a close, the housing market in the Northwest saw a noted increase in eager sellers.

“Buyers in December were reaping the benefits of market-weary sellers who were willing to give up part of their bloated home equity to make a deal and move on,” said John Deely, principal managing broker at Coldwell Banker Bain, in the NMLS report.

That was confirmed by members across the NMLS, including Windermere Real Estate President OB Jacobi.

“The year ended with more of a splutter than a bang as home price growth continued to slow in December,” he noted.

That was rounded by a median closing price for houses of just $639,000 in King County, down from the 2018 high for the county of $726,275 back in May.

Ultimately, according to Jacobi, this is “bringing us closer to a more balanced market,” predicting slowed growth for home prices through 2019 (around 5.5 percent he estimates).

The reasoning for this drop can be found in a variety of factors, including unsustainable home price growth, rising interest rates, and a drop in consumer confidence.

The outlook for the year ahead continues to look positive for home-buyers, who may find that acting quickly might serve them best.

“Buyers should act now, act deliberately, act decisively, and act in conjunction with an experienced real estate professional,” advised Dick Beeson, the principal managing broker at RE/MAX Northwest in Gig Harbor.

Among the buyers in the market will be plenty of first-timers, as more millennials get married, have children, and build their respective households.

“Although many of them will face significant obstacles to buying due to student debt, lack of down payments, and Seattle’s high-priced housing, this group is likely to buy more homes in 2019 than any other demographic,” Jacobi predicted.

That being so, pushing out to more remote areas outside of Seattle’s expensive market is starting to drive up prices everywhere. The NMLS’s report noted that demand in those outlying markets has driven up prices in counties like Cowlitz, Lewis, and Thurston 12.4 percent over the last year.

Meanwhile in King County, condo listings have quadrupled in the last 12 months, as buyers look for alternatives to pricier houses.

All this remains consistent with a prediction from Redfin at the end of the 2018, where they expected “demand to cool the most” in 2019 for a handful of major markets across the country, including Seattle, Portland, and San Francisco among others.

~My Northwest Staff

Home prices have finally hit a wall on the West Coast

Home sellers have had it easy over the last few years. Housing demand has risen along with the improving economy, and home builders have struggled to build at a pace that keeps up with that demand. The result was a shortage of housing inventory that allowed sellers to sit back and let buyers bid up the price of their home.

But data from the last two months suggests that the housing market is entering a new stage, especially on the West Coast, where home prices have risen beyond most people’s capacity to pay. Instead of bidding wars, houses are sitting on the market longer, and price cuts are becoming more common. Buyers are starting to regain the upper hand.

“If we’re right, nationally, we’ve already entered the early stages of a buyer’s market,” writes Rick Palacios Jr. director of research at John Burns Real Estate Consulting. “Should supply levels cross above five months we’ll be watching for flat [or] possibly declining resale prices in some markets, especially where affordability is already very stretched.”

Housing supply constraints have been a primary factor in driving prices up, but there are signs this is changing. Data from the National Association of Realtors shows that “months of supply”—a leading indicator of housing supply that divides the number of active listings by the pace of sales—has ticked up year-over-year in the last few months after years of declines.

But real estate experts often say there’s no such thing as a national housing market—new homes for sale in New York, for example, don’t mean anything for people who live in San Francisco—and the spikes in supply are most pronounced on the West Coast.

Some of the biggest jumps are in markets that have been red hot over the last 5 years, namely the San Francisco Bay Area, Seattle, and Denver. Active real estate listings in September were up by a whopping 113 percent year-over-year in San Jose, 81 percent in Denver, 47 percent in Seattle, 33 percent in San Francisco, 34 percent in San Diego, and 12 percent in Los Angeles.

But the trend isn’t limited to the largest markets, as smaller cities across California, Colorado, Washington, and Oregon have seen jumps as well. Of the 30 markets that showed the highest spikes in active listings in September, 19 are in those four states.

While the number of active listings has risen, home sales have fallen dramatically across the U.S., as inventory woes and affordability constraints continue to drag down the market as a whole. But as with supply spikes, home sales are falling by double digits in some markets on the West Coast. In September, home sales were down 24 percent year-over-year in Seattle, 16 percent in San Jose, 16 percent in Los Angeles, and 13 percent in San Diego.

The combination of more homes on the market but fewer sales means that despite surging demand for housing, homes are sitting on the market. And given the affordability crisis sweeping across America, especially on the West Coast, this points to only one thing: Home prices have outpaced wages in these markets and people simply can’t afford to buy.

In Southern California, the year-over-year rate of home price appreciation—meaning the rate at which home prices are going up—began to decline in the spring and has continued to do so into the fall. Northern California was a little later to respond, but San Jose and San Francisco registered their first year-over-year declines in September.

Another wild card in this dynamic is rising interest rates, which are once again approaching 5 percent. Rising rates were cited as a possible cause of last week’s stock market selloff, and the housing market is particularly sensitive it. When interest rates rise, monthly mortgage payments go up.

For markets where home prices have already hit their ceiling, rising rates will likely cause home prices to drop just because something will have to give for people to be able to buy a home. Unfortunately for home buyers, the price drop won’t result in lower payments, just that they will pay less on the principal of their mortgage and more on interest.

Regardless of where rates go, though, home prices on the West Coast markets where supply is up and sales are lagging appear to have nowhere to go but down.

~Jeff Andrews, Curbed

Key indicators for Western Washington housing still rising, but brokers detect slowdown and uncertainty

Early seasonal snow and questions swirling around the tax plan unveiled last week by House Republicans could make the usual seasonal slowdown more pronounced, say industry leaders from Northwest Multiple Listing Service. For October, however, key indicators trended upwards.

Pending sales rose nearly 8 percent from a year ago, closed sales were up 5.2 percent, and prices jumped about 8.2 percent, with 14 counties reporting double-digit gains. Even the number of new listings improved on the year-ago total.

Northwest MLS figures for the 23 counties it serves show members added 8,466 new listings to inventory during October, outgaining the year-ago total of 7,575 by 11.8 percent. Buyers outnumbered new listings, with 10,586 of them having their offers accepted. That number of pending sales was up nearly 8 percent from the same month a year ago.

“The challenge for buyers actually isn’t lack of choice, it is the rapid pace of sales,” suggested Ken Anderson, president/owner of Coldwell Banker Evergreen Olympic Realty.

“The market in Thurston County has never been better for sellers, and they’re getting the message,” Anderson remarked. His analysis revealed a 10-year high for sellers coming to market during October. “These savvy sellers are not waiting until spring to sell. They are taking advantage of today’s great market and making their move now,” he reported.

Buyers may find themselves in a quandary as the year winds down as they contemplate limited supply, possible upticks in interest rates and tax reform. Last week’s announcement of a provision in a GOP tax proposal to cap the mortgage interest deduction is concerning to buyers, brokers and builders.

“Imagine if the proposed plan to cap the mortgage interest deduction at $500,000 is approved in a market that is starved for homes and where the median price [for a single family home in King County] is now $630,000,” said O B Jacobi, president of Windermere Real Estate. “Homeowners may be less likely to sell because they would be giving up their grandfathered tax credit on their current home. That’s fewer homes for sale in a market where we really need them,” he stated, adding, “There could also be a flood of new buyers trying to purchase before the plan is passed, adding to the already hyper-competitive market conditions.”

Northwest MLS data show 66 percent of single family homes sold so far this year (Jan. – Oct.) in King County had selling prices of $500,000 or higher.

Within King County prices are considerably higher. In Seattle, year-over-year prices jumped 17.6 percent, from $625,000 to $735,000. On the Eastside, the median price for a single family home rose 10 percent from a year ago, increasing from $768,000 to $845,000. Nevertheless, high prices did not seem to deter many house-hunters.

J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, noted October was the “best ever for sales activity in the Puget Sound region. With a large buyer pool for each new listing, we saw a higher percentage of new listings sell within the first 30 days of coming on the market,” Scott reported, while also noting the seasonal change in housing market dynamics. “As we enter the winter market, the number of new listings being added will be in short supply from now through February,” he explained.

Inventory remains low in many counties in the Northwest MLS system. Overall, there is only 1.5 months of supply of single family homes and condos combined. In King County, it’s less than one month. Industry analysts say four to six months typically indicates a balanced (or “normal”) market.

Most brokers agree inventory will not grow over the next few months. “Sellers who bring their homes on the market over the next three months will have a lot of interest because of the pent-up demand of buyers who are going to have fewer houses to consider,” suggested Wilson.

“Homebuyers in our area are at a real disadvantage right now,” commented Wilson, a member of the Northwest MLS board of directors. “They have to be pre-underwritten with their lenders, put forward a conventional or better offer, put down substantial earnest money, and hope that multiple offers do not escalate the price out of their affordability zone.” He fears “more and more buyers will be sidelined.”

~Northwest Multiple Listing Service

This is the Hottest Real Estate Market in the Country–by Far

Home prices have been on the rise nationally since February, but no area of the country has seen a spike like the Pacific Northwest.

The price of single family homes in the Seattle area has soared 13.5% in the past 12 months. That’s more than twice the national average of 5.9%.

The median single family home in Seattle, as of August, costs $730,000 – though residents willing to brave the 1.5 hour (one way) commute from Snohomish or Pierce County can find a home for $455,000 or $313,000, respectively.

The numbers, from the monthly Case-Shiller home price index, show Portland in second place nationally, with an average 7.6% increase.

Demand for homes in Seattle has greatly outstripped supply, which has fueled the steep increases. And prices aren’t expected to drop anytime soon, since there’s not a lot of private undeveloped land left for builders to create new subdivisions.

The 12-month surge is the largest increase in Seattle housing prices since 2006, in the midst of the housing bubble. Since 2012, when the market bottomed out, average home costs have increased 79% – and they’re now 20% above their previous peak at the height of the bubble.

Chris Morris, Fortune

Seattle Market Highlights

MARKET HIGHLIGHTS

Labor Market: King County unemployment falls to 4.3 percent
Retail Market: Ross Dress for Less coming to Ballard; Ballard Blocks almost full
Regional Development: Hotels could transform key downtown Seattle corridor
Travel: Survey Reveals Great Ratings for Hotels in Seattle
Economy: Obama administration announces US manufacturing regions
Real Estate Market: The top 1 percent snap up homes in Seattle

Area Stores Opening

Babirusa debuts with small plates and a big burger (Seattle)
Ross Dress for Less coming to Ballard (Seattle)
PCC Natural Markets plans its first expansion since recession in Greenlake (Seattle) Seattle’s Metsker Maps opens store at Sea-Tac Airport (Tukwila)
Oasis bubble tea shop coming to Capitol Hill (Seattle)
June opening for Local Burger (Bellevue)
San Francisco Beer Bar Toronado is expanding to Seattle
The Canterbury Ale House raises its gate on 15th Ave E (Seattle)
Ericka Burke is opening Canal Market in Portage Bay (Seattle)

Area Stores Moving/Renovation/Other
None

Area Stores Closing
Dot’s Charcuterie and Bistro is closing (Seattle)

Seattle is the fastest-growing big city in the U.S.:
We’ve come a long way from the “Will the last person leaving Seattle –Turn out the lights” era of the 1970s. Last year, Seattle grew faster than any other major American city, according to population estimates released Thursday by the Census Bureau. From July 1, 2012 to July 1, 2013, Seattle grew by 2.8 percent — the highest rate among the 50 most-populous U.S. cities. Seattle added nearly 18,000 residents in the one-year period, bringing its population to about 652,000.
Source: The Seattle Times, May 23, 2014
http://blogs.seattletimes.com/fyi-guy/2014/05/22/census-seattle-is-the-fastest-growing-big-city-in-the-u-s/

Seattle ranks high among leading locations for economic, job growth:
The Seattle/Bellevue/Everett area is ranked 25 out of 379 metropolitan statistical areas that Area Development has analyzed from economic and workforce data in order to identify and understand which cities across America are emerging as front-runners in this new era of economic development possibilities. Many factors can move a city’s attractiveness as a business site into the foreground, and chief among those drivers for 2014 are economic benefits from domestic manufacturing, oil and gas fields, and the spread of high-technology to urban epicenters.
Source: areadevelopment.com, June 2014
http://www.areadevelopment.com/Leading-Locations/Q2-2014/Leading-Metro-Locations-Full-Results-442216.html

Seattle one of three ‘really hot markets’: Seattle is one of three cities where commercial real estate prices are in a different league from the rest of the country, Billionaire investor Sam Zell said Tuesday. The nation is bifurcated between the coasts and center when it comes to commercial real estate, and “really has two, maybe three really hot markets: San Francisco, New York and Seattle,” Zell said on FOX Business Network’s Opening Bell with Maria Bartiromo.
Source: seattlepi.com, June 10, 2014
http://www.seattlepi.com/aboutus/article/Zell-Seattle-one-of-three-really-hot-markets-5542101.php

                                                                                    ~Steve Fuller, Seattle Times

Housing Market Righting Itself as Buyers, Brokers Get Creative

Housing around Western Washington is on an upward trajectory, but inadequate inventory “in the right prices and locations” makes for a “very difficult market for purchasers and brokers,” according to an executive with one multi-office real estate company.

New figures from Northwest Multiple Listing Service show inventory increased in May compared to a year ago, but brokers say competition is keen. “Multiple offers and escalation clauses occur on a regular basis for properties that are extremely well priced and in great condition,” reports Dick Beeson, principal managing broker at RE/MAX Professionals in Tacoma.

Mike Gain, a former chairman of the Northwest MLS board of directors, also commented on the bidding wars. “We are experiencing more multiple offers than I have experienced in my 35 years of practicing real estate in this marketplace,” stated Gain, the president and CEO of Berkshire Hathaway HomeServices Northwest Real Estate. “This is a very difficult market for purchasers, our agents and brokers. If we had inventory to handle the demand our pending and sold numbers would be greatly increased,” he believes, adding, “We desperately need good quality inventory.”

Last month’s pending sales topped the 10,000 mark for the first time in twelve months. The number of mutually accepted offers totaled 10,373, outgaining a year ago by 328 transactions for an increase of almost 3.3 percent. Last month’s total was the highest volume of pending sales since June 2006 when brokers tallied 10,448 transactions.

With demand outpacing supply in many parts of the region, brokers are noticing more creativity among competing parties. “Offer review deadlines have become pretty commonplace in this market, as have pre-inspections,” said OB Jacobi, president of Windermere Real Estate. He said some agents and buyers are getting even more aggressive by submitting their offer prior to the deadline.

Jacobi said there’s also an increase in the number of cash buyers, and buyers willing to waive their financing contingency, “making it even more difficult for the vast majority who don’t have this option.” With ongoing competition likely to continue, Jacobi expects agents and buyers to be “increasingly creative until the market becomes more balanced, which probably isn’t going to happen any time soon.”

MLS figures show months of inventory slipped to 3.33 from April’s figure of 3.46. In King County, supply stayed about even with April (1.78 months of inventory in May versus l.74 months in April).  Snohomish slipped from 2.47 months to 2.37. Four to six months is considered to be a balanced market.

Fewer sales closed last month compared to a year ago (down 2.2 percent), but prices increased. Compared to April, the number of completed sales in May jumped by 997 transactions for a gain of 16.1 percent. Brokers reported 7,187 closed sales of single family homes and condominiums last month with a median selling price of $285,000. That sales price reflects a 3.6 percent increase from the year-ago figure of $275,000.

For single family homes (excluding condos) the area-wide price rose 4.2 percent, increasing from $285,000 to $297,000. Condo prices jumped nearly 15% from the year-ago price of $200,000 to last month’s price of $229,900.

Brokers added 12,605 new listings to inventory during May, about 10 percent more than a year ago. At month end, the selection across the 21 counties served by Northwest MLS included 23,917 active listings. That total reflects a 9 percent increase from twelve months ago when buyers could choose from 21,943 homes and condominiums.

In several counties served by Northwest MLS distressed properties make up about 20 percent of the activity, according to an analysis by Beeson. His figures show one of every five homes that sold in Pierce, Thurston, Kitsap and Cowlitz counties was distressed, while in King County such properties accounted for only around 10 percent of the sales.

Beeson, a board member at Northwest MLS, expects distressed properties will continue to be an integral part of the market. As median prices continue to rise around Puget Sound, he believes the inventory of short sales will be reduced.

“The inventory of bank owned properties holds steady at twice the number of short sales,” Beeson reported, adding, “This probably will not change in the foreseeable future as banks have warehoused much of their ‘shadow inventory’ and are slowly bringing it on the market so as not to glut the market, and to help keep pricing levels up, which benefits them as well.”

Another MLS director, George Moorhead, characterized the market as “sluggish” in areas. Buyers are about “45 days later to the starting line” compared to patterns of the past three years. “Some areas are still doing extremely well and still seeing multiple offers, but not on the whole,” observed Moorhead, the managing broker at Bentley Properties in Bothell. Overall, he believes “the market is righting itself slowly and becoming healthy and sustainable.”

Snohomish anomaly
Inventory in Snohomish County jumped 43 percent compared to a year ago. Asked about the surge, Moorhead attributed much of it to an influx of new construction. The MLS database shows 406 of 2,206 listings of single family homes are classified as new construction. That’s about twice the number from a year ago. “The price points are some of the best in the market areas for size, style and overall location,” Moorhead stated.

Rosy outlook
Despite inventory shortages, Northwest MLS brokers were mostly upbeat about short-term activity:

• “Locally, the summer selling season can be the busiest time of the year. This year with the lack of inventory it is probably the best market sellers will ever experience,” suggested Mike Gain.
• “We anticipate the market remaining at modest levels of growth [in Snohomish County] and inventory levels continuing in a healthy range of seven to eight months instead of two to three months.”  — George Moorhead
• “Home buyers received a summer gift, just in time for the home buying season: interest rates have come down one third of a point from a month ago.” – J. Lennox Scott, chairman and CEO, John L. Scott Real Estate.
• “In almost every county, inventory increases since last year have brought a sigh of relief from many buyers . . . If interest rates continue to hold under 5 percent and the unemployment picture continues to improve or remain the same, we should see a moderate to strong market throughout the balance of 2014.” – Dick Beeson. Wilson urged sellers to make sure their home is exposed “to as many real estate brokers from as many real estate firms as possible to ensure all buyers in your area and price point have a chance to make an offer on your home.”~NW Multiple Listing Service
• Buyers also need to be prepared, Wilson suggested. In addition to being fully approved for financing a mortgage before making an offer, buyers need to be mindful that their offer “may not be the only one being tendered to a seller” and be poised to respond.
• MLS spokespeople encouraged potential sellers to consider listing now. “Now is a great time for move up sellers/buyers who can sell their homes quickly today and secure another at today’s prices and today’s low interest rates,” Gain suggested. He also noted the majority of homeowners have experienced significant gains in their equity over the past two years. “Sellers who took their homes off the market in the down market can now get the prices they were wanting when they made their decisions to rent them. The prices are back and the homes will sell,” he emphasized.

~NW Multiple Listing Service

3 Reasons to Sell Your Home this Spring

Many sellers are still hesitant about putting their house up for sale. Where are prices headed? Where are interest rates headed? These are all valid questions. However, there are several reasons to sell your home sooner rather than later. Here are three of those reasons.

1. Demand is about to skyrocket

Most people realize that the housing market is hottest from April through June. The most serious buyers are well aware of this and, for that reason, come out in early spring in order to beat the heavy competition. We also have a pent-up demand as many buyers pushed off their home search this winter because of extreme weather. Sellers in markets where seasonal weather is never an issue must realize that buyers relocating to their region will increase dramatically this spring as these purchasers finally decide to escape the freezing temperatures of the winters in the north.

These buyers are ready, willing and able to buy…and are in the market right now!

2. There Is Less Competition – For Now

Housing supply always grows from the spring through the early summer. Also, there has been a growing desire for many homeowners to move as they were unable to sell over the last few years because of a negative equity situation. Homeowners have seen a return to positive equity as prices increased over the last eighteen months. Many of these homes will be coming to the market in the near future.

The choices buyers have will continue to increase over the next few months. Don’t wait until all the other potential sellers in your market put their homes up for sale.

3. There Will Never Be a Better Time to Move-Up

If you are moving up to a larger, more expensive home, consider doing it now. Prices are projected to appreciate by approximately 4% this year and 8% by the end of 2015. If you are moving to a higher priced home, it will wind-up costing you more in raw dollars (both in down payment and mortgage payment) if you wait. You can also lock-in your 30 year housing expense with an interest rate at about 4.5% right now. Freddie Mac projects rates to be 5.1% by this time next year and 5.7% by the fourth quarter of 2015.

Moving up to a new home will be less expensive this spring than later this year or next year.

Home Prices Up 12.9% from Last Year: Case-Shiller

 In recent housing news, the latest Standard & Poor’s/Case-Shiller Home Price Index tracked a 0.8 percent rise in February based on a seasonally adjusted basis. This is slightly better than the predictions of national economists. A Reuters poll of economists had forecast a 0.7 percent rise.

Nationwide home prices were up 12.9 percent on a year-over-year basis, and while the numbers—released on Tuesday– seem to indicate a healing market, the U.S. home prices were actually nearly unchanged in February, after slumping 0.1 percent in each month since November, according to the 20-city composite index. The 12.9 percent year-over-year February basis, while seemingly positive, actually shows that price growth is slowing down.

Numbers were down from 13.2 percent in January, and fell even further from the peak of 13.7 percent in November. Additionally, the percentage lands just a smidge shy of the predicted year-over-year basis, which had weighed in at an expected 13 percent.

“Despite continued price gains, most other housing statistics are weak,” said David Blitzer, chairman of the index committee at S&P Dow Jones Indices, who cited new and existing home sales data. “The recovery in housing starts, now less than one million units at annual rates, is faltering. Moreover, home prices nationally have not made it back to 2005.”

Zillow Chief Economist Dr. Stan Humphries, commented, “Like pending homes sales numbers yesterday, the Case-Shiller numbers today are generally pretty positive. Behind the flat unadjusted monthly change is a large seasonally adjusted change in home prices. It’s good to have some positive signs amidst some of the sluggish news of late,” “The housing market is showing signs of slowing, but this was expected and is part of a broader return to normal as appreciation slows down,mortgage rates inch up and more balance between buyers and sellers emerges.

Homeownership still represents a good bargain for those that can afford it and can find a suitable home. But affordability issues are becoming an issue in a few markets, and those problems will only get worse as mortgage interest rates rise.”

Pending Sales Change Course

In other real estate news released this week, the Pending Home Sales Index (PHSI), a forward-looking indicator based on signed contracts, increased 3.4 percent in March to 97.4 from an upwardly revised February level of 94.2. The PHSI monthly increase reported by the National Association of REALTORS® was the first since June of 2013, although it remains 7.9 percent below the level of 105.7 last March.

The March PHSI increased in the West, South and Northeast by 5.7 percent, 5.6 percent and 1.4 percent respectively, but fell slightly in the Midwest. Year-over-year, all of the regions were down, ranging from decreases of 11.1 percent and 10.1 percent in the West and Midwest to decreases of 5.9 percent and 5.3 percent in the Northeast and South.

Last week, Census reported a 14.5 percent decrease in March new home sales. Extreme weather was a factor in decreased new and existing home sales at the beginning of the year. The March increase in the PHSI suggests that the existing home market will move forward throughout the spring. The growth in household formations and strong pent-up demand will maintain that momentum throughout this year.

~RIS Media

Mortgage Rates Fall Ahead of Spring Buying Season

Mortgage rates seem to be doing their part to spur the spring home-buying season, according to the latest data released Thursday by Freddie Mac.

After two weeks of increases, the 30-year fixed-rate average fell back to 4.34 percent with an average 0.7 point. It was 4.41 percent a week ago and 3.43 percent a year ago.

The 15-year fixed-rate average also edged down, falling to 3.38 percent with an average 0.6 point. It was 3.47 percent a week ago and 2.65 percent a year ago.

Hybrid adjustable rate mortgages declined as well. The five-year ARM average dropped to 3.09 percent with an average 0.5 point. It was 3.12 percent a week ago and 2.62 percent a year ago.

The one-year ARM average sank to its lowest level of the year, sliding down to 2.41 percent with an average 0.5 point. It was 2.45 percent a week ago.

“Mortgage rates eased a bit following the decline in 10-year Treasury yields,” Frank E. Nothaft, Freddie Mac vice president and chief economist, said in a statement.

“Also, the economy added 192,000 jobs in March, which was below the market consensus forecast but followed an upward revision of 22,000 jobs in February. Meanwhile, the unemployment rate held steady at 6.7 percent.”

Mortgage applications continued to decline, according to the latest data from the Mortgage Bankers Association.

The Market Composite Index, a measure of total loan application volume, fell 1.6 percent. The Refinance index dropped 5 percent, while the Purchase Index showed an uptick for the third week in a row, increasing 3 percent.

The refinance share of mortgage activity waned for the ninth week in a row. Refinances accounted for 51 percent of all applications, their lowest level since July 2009.

~Kathy Orton, Washington Post

Moving-Up? Do it NOW not Later

A recent study revealed that the number of existing home owners planning to buy a home this year is about to increase dramatically. Some are moving up, some are downsizing and others are making a lateral move. Another study shows that over 75% of these buyers will, in fact, be in that first category: a move-up buyer. We want to address this group of buyers in today’s blog post.

There is no way for us to predict the future but we can look at what happened over the last year. Let’s look at buyers that considered moving up last year but decided to wait instead.

Assume they had a home worth $300,000 and were looking at a home for $400,000 (putting 10% down they would get a mortgage of $360,000). By waiting, their house appreciated by 13.8% over the last year (national average based on the Case Shiller Pricing Index). Their home would now be worth $341,400. But, the $400,000 home would now be worth $455,200 (requiring a mortgage of $409,680).

Here is a table showing what the additional monthly cost would be incurred by waiting:

                       

Prices are projected to appreciate by over 4% and interest rates are also expected to rise by as much as another full percentage point. If your family plans to move-up to a nicer or bigger home this year, it may make sense to move now rather than later.

~KCM Blog